INSUBCONTINENT EXCLUSIVE:
(Photo Internet reproduction)Some relief came last week when Lula ceased commenting on the exchange rate and the government announced
spending cuts.Intervention decisions typically involve the monetary policy director and the Central Bank president.The floating exchange
rate is the regime, and the Central Bank should intervene during liquidity shortages or price formation issues
For years, the president had to approve any action.However, the pandemic granted the monetary policy director autonomy to conduct forex
however, has claimed abnormal speculation
The Central Bank maintains no specific exchange rate target, but sustained dollar appreciation increases import costs, pressuring
inflation.In cases of liquidity shortages or market dysfunction, the bank can announce foreign exchange swaps or buy and sell dollars in the
spot market.Tensions between Lula and the Central Bank may rise after the Copom paused a year-long monetary easing cycle without signaling
rate-hike cycle inevitable
